Jun 1, 2022 - Economy

Crypto SPAC deals take a long time under SEC review

Illustration of a roadwork sign with a blank check

Illustration: Sarah Grillo/Axios

There appears to be one route to public markets that will slow down crypto: merging with SPACs or special purpose acquisition companies.

Why it matters: The extra time being seen in regulatory reviews for crypto SPAC deals coincides with heightened regulatory scrutiny for those go-public vehicles, as well as for the crypto sector at large.

By the numbers: A review of closed SPAC deals from April 2021 to April 2022 shows that the three in the crypto sector took more than 7 months to close, compared to an overall average of 5.6 months for all SPAC deals during that period.

  • Meanwhile, three other crypto firms have been waiting for about double the overall average time for the go-ahead from the Securities and Exchange Commission: Israeli-trading platform operator eToro; stablecoin issuer Circle Internet Financial; and crypto exchange Bullish.
  • Technically, the clock reset for Circle because it announced a new deal in February at a higher valuation, albeit with the same SPAC.

Driving the news: Bullish on Tuesday submitted its sixth amended filing since its November 1 proxy, which still contains no record or vote date. The appearance of those dates in filings signals that the deal is getting closer to the finish line.

  • The record date tells you who can vote (shareholders) and a vote date tells you when.
  • Bullish did not respond to queries about its regulatory review in time for publication.

Separately, media company Forbes just scrapped its plans to go public with a SPAC. Recall that the deal came with a $200 million investment from crypto exchange Binance.

Details: Bullish is a subsidiary Block.one, the blockchain company behind the infamous EOS ICO and protocol.

  • The exchange first rolled out in November to select institutions offering trading in bitcoin, ether, EOS tokens and USD coins.
  • Its liquidity pools allows customers on its platform to share in fees generated by the exchange from trading and lending via automated market-making and "safe" margin lending, according to Bullish.
  • Bullish Exchange does not provide services in the U.S., Canada, China, Japan, Israel and Russia at the moment.

Flashback: When Bullish announced its SPAC deal with Far Peak Acquisition Corp. in July 2021, it was just a blueprint of an exchange with a star-studded cast of Wall Street's who's who.

  • The SPAC's CEO and to-be CEO of post-deal Bullish is Tom Farley, who once was the president of the New York Stock Exchange.
  • Investors disclosed at that time included BlackRock, the world's biggest money manager and Michael Novogratz' Galaxy Digital.

Our thought bubble: The deals that make it through the SEC might say something about the regulator's level of comfort with a specific type of crypto company. Example, the controversial payment-for-order-flow practice under review.

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